IT Spending Slowed by Emerging Markets: IDC

While overall industry growth has cooled, some areas of tech spending are heating up in mature economies, including the United States and Western Europe.

Worldwide IT spending will be inhibited by the economic slowdown in emerging markets in 2014, in addition to an inevitable deceleration in the growth of smartphones and tablets, according to a report from IT research firm IDC.
While overall industry growth has cooled, some areas of tech spending are heating up as businesses in mature economies, including the United States and Western Europe, begin to invest in overdue infrastructure upgrades and replacements.
For instance, spending on servers will increase by 3 percent, after last year’s decline of 4 percent, and storage spending will also grow by 3 percent this year, following a 0.5 percent decline in 2013.
However, IDC has lowered its forecasts for IT market growth in Asia Pacific (including China), Central and Eastern Europe, the Middle East and Africa, driving down its forecast for worldwide IT spending growth to 4.6 percent this year in constant currency terms, down from the previous forecast of 5 percent.

"The inevitable slowdown in the explosive pace of smartphones and tablets is masking an underlying improvement in many areas of IT spending," Stephen Minton, vice president in IDC’s Global Technology and Industry Research Organization (GTIRO), said in a statement. "Businesses in mature economies are beginning to feel more confident about the economy compared to a year ago, and this is translating into new IT investments. There’s significant pent-up demand in the U.S. and Europe for infrastructure upgrades, capacity and bandwidth investments and overdue replacement cycles."

Despite the pickup in mature economies, the report noted there are still significant inhibitors that will mean that IT spending growth remains moderate by historical standards. Cannibalization remains a broad trend, impacting everything from PCs (tablets) to software and services (the cloud) and ensuring major disruption for individual vendors.
Meanwhile, enterprise software spending remains broadly strong, with growth still expected in the range of 6-7 percent. Excluding mobile phones, IT spending growth will actually accelerate in 2014 from 2.9 percent last year (excluding phones) to 3.4 percent this year, according to the report.
"What goes up, must come down, and emerging markets have been on the down slope since last year," Minton continued. "The good news is that, at the same time, mature economies have stabilized significantly. The U.S. seems to be heading in the right direction, and the worst of the crisis may be over in Europe. While growth in mature economies will still lag emerging markets in most cases, the balance of risks has shifted considerably."